Tribunal: Agreement was not a penalty clause
A Devon law firm was entitled to demand repayment of a caseworker’s CILEX course fees after she left, an employment tribunal has ruled.
Judge Hastie in Bristol found that the agreement allowing this was “not unreasonable”.
Ms L Kilpatrick worked for three years as a case progression officer at Patterson Law, a firm based in Newton Abbot specialising in motoring offences, before handing in her notice in July 2022 and leaving in November.
In August 2021, the firm had agreed to help with her CILEX course fees and Ms Kilpatrick signed an agreement that she would repay any fees incurred during the three years preceding her leaving date, potentially as a deduction from salary.
During her notice period, she agreed to repay the fees in 12 monthly instalments of £277.25. The first instalment was taken from outstanding holiday pay and Ms Kilpatrick made one further payment of £138, leaving £2,882 unpaid.
She then brought the proceedings, claiming unlawful deductions from wages. Ms Kilpatrick asserted that the repayment agreement was a restraint of trade or a penalty clause, because the terms did not reduce over time to give value for her training.
She argued that the agreement should be declared void and monies already paid returned.
Judge Hastie said it could not be a penalty clause as one could only arise where there has first been a breach of contract – here, Ms Kilpatrick resigned on notice.
Even if it was a penalty clause, the terms of the repayment agreement did not meet the test of being “out of all proportion” to the firm’s legitimate interests.
Further, there was no restraint of trade. Ms Kilpatrick left her employment “in full knowledge” that the debt would become due and then agreed a scheme to repay it.
“The agreement did not seek to restrict her freedom to work for others or restrict her in any way from her work. The claimant resigned and obtained alternate work within a short period of concluding her employment with the respondent…
“The repayment agreement signed by the claimant incorporated a tapering effect as it was expressed to cover fees incurred in the three years immediately preceding the termination date, and thereby reduced with time.”
This was “not unreasonable”, the judge continued, adding that the outstanding balance was “relatively modest when set against the claimant’s income as a CILEX trainee and consequently a qualified CILEX lawyer”.
As a result, the tribunal concluded that Patterson Law did not make an unlawful deduction from wages.
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